In their latest episode of the VALUE: After Hours Podcast, Value Stock Geek (VSG), Jake Taylor, and Tobias Carlisle discuss:
- Warren Buffett’s Never-Sell Strategy
- The Gambler Who Cracked the Horse-Racing Code
- Is It Wise To Take On Carl Icahn?
- Diversify Your Holdings Using The Weird Portfolio
- Siegel vs Bloomstran On The Nifty 50
- How To Think About Valuation
- We Could Still Have a Good Decade For Small-Cap Value
- SPIVA Scorecards
- Something Has To Give In The Housing Market
- The Shiller PE Never Gets Cheap
- How Homebuilder NVR, Inc. Mitigates Risk
- The Impact On Markets – China Ending Its Zero Covid Policy
- We’re Flat From May 2022
- Berkshire Hathaway Meet-Up
You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:
Tobias: This meeting is being live streamed. Gentlemen, we are live. This is Value: After Hours. I am Tobias Carlisle, joined as always by Jake Taylor and very special guest today, Value Stock Geek. What’s up, VSG? What are we calling you for this hour?
VSG: You can call me VSG.
Jake: I like it. That works. What’s up, fellas? How are we doing?
Tobias: This is an interesting market, fellas. I’m glad we’ve got the deep value crew on today to dig through this.
Jake: Well, I got to say, we’re recording this the Tuesday before the Berkshire meeting. I’m like a kid before Christmas. I can’t concentrate on-
Tobias: You can’t concentrate– [crosstalk]
Jake: -anything this week. I’m getting nothing done. I’m totally fried.[laughter]
VSG: It’ll be interesting to see what he says, especially about some of his recent positions. I can’t wait for the questions about Oxy.
Jake: Yeah. I think it’s going to be a blowout weekend. I wouldn’t be surprised if it’s a new all-time record for attendance.
Tobias: Well, that’s the– [crosstalk]
VSG: Don’t they set records every year?
Tobias: No, because we got a few COVID years.
Jake: Especially, when China was pinched off still, that cuts about 10,000 out of the population. But I bet they’re back and there’s a lot of interesting things happening. So, I think Buff Dawg is going to be in high demand this year.
Tobias: Let me just do some shoutouts, because we got a good– [crosstalk]
Jake: Geography lesson?
Tobias: Kennesaw, Georgia. Are you first in the house? Jack’s first in, but Kennesaw Georgia gets the– Savonlinna, Finland, what’s up? Dubai. Samson’s from Dubai. Atlanta. Gothenburg, Sweden. Glenview. Cuenca, Ecuador. Toronto. Leeds. Kitchener, Ontario. Regina, Canada. All right, good spread. Yeah, IEP. Is that the first topic? Is that the first-
Jake: All right, I guess– [crosstalk]
Tobias: [crosstalk] off the rank?
Jake: Oh, you just lead off.
Tobias: For folks who are just tuning in a little bit, this is Value Stock Geek. He’s our special guest today. Value Stock Geek, he’s with the CIA and he’s in the Witness Protection Program.
Tobias: He’s not putting his face on. You just hear his voice in the background. Before we jump in, tell us a little bit about Value Stock Geek.
Jake: The man, the myth, the legend.
Tobias: We’re not asking personal questions. Just the professional stuff.
VSG: I’m mainly a blogger. I’ve been documenting my own investment journey online since about 2016. I’ve been blogging about my actual stock picks lately. I’ve run a Substack, where I profile a new company every week and I try to determine whether or not it’s a good company. I’m building up a watch list of companies that I think are wonderful, that have good characteristics, like, high returns on invested capital moats, and I think they have some recession resistance, and I’m trying to capture them when they’re cheap.
I’ve also designed an asset allocation that I wrote a book about called The Weird Portfolio, which I use as a vehicle for most of my savings. And also, on my Substack, I’m also running a podcast where I’m interviewing really interesting investors like yourself. That’s been a great learning experience. I’ve been talking to a lot of really interesting people on there. Some upcoming podcasts that are coming up tomorrow. I’ll be releasing one with Lawrence Hamtil. I also talked to The Science of Hitting recently. So, we have a lot of interesting stuff coming up on that front.
Jake: Shoutout to Alex.
VSG: Yeah, he’s the man.
Is It Wise To Take On Carl Icahn?
Tobias: So, first came off the rank IEP. Have you taken a look at IEP? You ever taken a look at that?
Tobias: That’s Icahn’s. Just let me back up a little bit. Icahn Enterprises, I think it’s a– [crosstalk]
Jake: It’s a holding company.
Tobias: It’s a funny structure. It’s a limited partnership that the units trade in.
VSG: Oh, you’re talking about– So, IEP is Icahn, an entity that’s listed that de-runs.
VSG: Oh, okay. I have looked at that before. Yeah.
Tobias: It’s got a funny collection for– [crosstalk]
Jake: Yeah. It’s a closed end fund.
VSG: I did a back test on it once and I saw a horrific drawdown it had from 2008 through 2010, and it had an 80% drawdown or something crazy. But it seems like he’s back now. He’s returned to those all-time highs.
Tobias: Has he really? Yeah, it tends to do that. It runs up and down. MLP, yeah, thank you, Chris Backes says, “MLP.”
Tobias: Hindenburg has written a short report on IEP. Have you guys followed that at all? Have you looked at it?
Jake: I just saw the tweet that was saying that– Questioning the marks within the portfolio and then also the fact that it’s trading way over NAV. So, you got– [crosstalk]
Tobias: Two ways to lose.
Jake: Yeah. Overly optimistic and also, maybe the marks are– And also, apparently fair amount of debt inside of it and maybe even some leverage on Icahn’s personal balance sheet borrowed. And apparently, it’s Ponzi-ish in its cash flows in that they’re doing at the money issuance, but also paying huge dividends. So, you have a little bit, like, pay the old investors with the new investor’s money situation, possibly. So, I don’t know. It’s provocative.
Tobias: The last time I looked at it was like 90 something percent owned by Icahn, and his distributions are in units in the trust rather than cash. So, he’s just cementing his holding on it. That would make it hard to short, wouldn’t it?
VSG: I like him.
Jake: I feel like, boy, you are playing with fire if you try to go at him in any way, and especially if he’s holding a lot of the deck of cards. I don’t know.
VSG: Yeah, he’s so vocal. I would not want to have him be my enemy. [laughs] If you’re listening, Carl, I love you. No offense. [laughs]
Tobias: Yeah. Even if it’s fundamentally overvalued and it’s a good short, it’s still technically a very tough thing to short, because he controls so much of it. He can go out and talk about it at any point in time and tear your face off, but I just wondered if it was good marketing by Hindenburg.
VSG: It sounds shady [laughs] based on all the facts we just heard. I wouldn’t want to be long it. That’s for sure.
Tobias: No, that’s right. I’ve looked at it lots of times. You want to own it when it’s bombed out. Not when it’s run all the way up.
VSG: Plus, with those MLPs, you get those annoying K-1 tax forms.
Tobias: Oh, yeah. That’s right.
VSG: You have to decide if it’s worth the pain of having all of your taxes super complicated and have to pay your CPA more money. [laughs]
Jake: Yeah, no doubt. Usually, no.
Tobias: What about this market? We got a little bit of volatility today on the back of some more of the bank. Are you following what’s happening there?
Jake: Subprime is contained.
Tobias: Yeah, I’ve got that much as well. That was a few weeks ago, right?
Jake: Oh, okay, sorry. Yeah, I don’t know. Definitely, what’s I think a little more interesting is that the bond market movements over the last this year, I guess, really year to date have been really big. The equity market is yawning about all of that, relatively speaking. So, I don’t know, it seems a little sanguine maybe. That’s usually not a good– I don’t know, that’s oftentimes where trouble happens is when everyone thinks we’re past the storm.
Tobias: Do you have any thoughts on that, VSG?
VSG: I have no idea what’s going to happen. [laughs] I could just as easily see us falling into a terrible 2008 style recession and rates go to zerp. I could also see a scenario where inflation continues ticking up. Right now, the economy is pretty strong. We still have 3% unemployment, the lowest in 50 years. Inflation does seem to be calming down. So, I guess, that’s why the stock market is getting excited. Yeah, I wouldn’t be surprised if out of nowhere something hits us over the head with a two-by-four. [laughs] We’re back down into hell and everybody is freaking out and selling things at absurd prices. Oh, it’s definitely I have no idea what’s going to happen next. It’s definitely a wild market.
We’re Flat From May 2022
Tobias: I posted a chart yesterday, which was the 2000-2007, 2000-2002 crash overlaid, and then the current thing that we’re going through, whatever it is. We’re not down that much. I looked at the year-on-year number. We’re down a little bit less than we are down today. So, year on year, all of the drawdown is due to today. Otherwise, we’d be flatter up. [crosstalk]
Jake: So, we’re like May of 2022? We’re flat from May of 2022?
Tobias: Basically, yeah. From May 1, May 2, whatever it is. May 2 or May 3, whatever the 12-month runs.
VSG: That’s pretty crazy. Yeah, you would think that the market would be down a little bit with everything that’s happened in the last year and how much interest rates have gone up. Yeah, I’d say that’s probably the biggest risk right now is probably on the real estate side of things. If these mortgage rate increases haven’t really seemed to have an impact yet on the housing market in a big way, prices are down a little bit, but it’s not the kind of catastrophe you would imagine. That’s probably the biggest risk out there right now. I don’t think the banks are as a terrible financial condition as they were back in 2007, 2009.
Tobias: The concern I have is the regional banks all have huge exposure to office and residential, and those rates have put a whole lot of that underwater. I don’t know how they dig themselves out from that without more of this. Somebody said that or I’ve seen some statistics, I haven’t checked it myself, that the market capitalization of the banks that have failed so far this year are bigger than all of the failures in 2008.
Jake: I saw a little graphic on that, and I wouldn’t think– [crosstalk]
Tobias: Was the market cap- [crosstalk]
Tobias: -misquoted it?
Jake: Yeah, it doesn’t matter. Maybe I’ll post it later on Twitter. It’s a cool-looking little chart actually, because it shows the time on the x-axis, and then it’s little bubbles depending on the size of the market cap of the failure. And so, you had like WaMu in 2008 was pretty good size and then a bunch of little pebbles around it, and then you get today and it’s three big blobs. So, it’s an interesting-looking little chart. I’ll put it up on Twitter later.
The Impact On Markets – China Ending Its Zero Covid Policy
VSG: Yeah, but nothing like Lehman yet. There’s been nothing of that kind of magnitude yet. Yeah, it’ll be interesting to see how it all shakes out. Like I said, I don’t really have any idea. I’ve heard both thesis that sound pretty plausible to me. I was talking to Michael Fritzell. He writes at Asian Century Stocks. He was talking about the impact of China ending the zero COVID policy, which is probably the most bullish argument I’ve heard for the global economy, where he thinks at the end of China of the zero COVID policy, it will really open up Asia and that will drive a lot more trade. Then on top of that, it should also ease the inflationary pressures that we’ve been experiencing, because a lot of that has been caused by the zero COVID policy. So, there’s a bullish thesis. [chuckles] So, maybe the bulls in the stock market have are onto something that I do not know.
Diversify Your Holdings Using The Weird Portfolio
Tobias: How does The Weird Portfolio deal with something like this? What’s the thinking behind The Weird Portfolio?
VSG: So, the thinking behind The Weird Portfolio is that you have some assets in there that should do well under different economic conditions. It really is created out of Harry Browne’s Permanent Portfolio. So, Harry Browne’s Permanent Portfolio is 25% stocks, 25% cash, 25% long-term Treasuries, and 25% gold. Your gold is there for inflation, your long-term Treasuries are there for a big deflationary bust, your cash is there to smooth things over, and then you have your stocks for prosperity. So, The Weird Portfolio is similar to that, but it’s a little bit more aggressive with some different tilts. So, it’s 20% US small-cap value, 20% international small, 20% long-term Treasuries, 20% gold, and then you have 20% that’s in real estate.
The thinking there is that you can pivot away from those big large cap bubbles by pivoting to small-cap value, and then you can internationally diversify it, so you can avoid some of the local bubbles, but that small-cap value is going to get crushed if there’s a deflationary bust. So, long-term Treasuries are there to help. If for instance, we do enter another 2008 or 1929 to 1932 situation, rates will come down pretty dramatically. You’ll probably have deflation that should help the portfolio. Gold is in there as a flight to safety asset. So, during a really extreme time of fear, like, COVID or the 2008 crisis, gold will either be stable or sometimes it goes up. It went up pretty significantly, like, 1929 to 1932.
It should also, over the long run, keep up with inflation, but that’s not always true. It should also help if the dollar weakens. So, that’s there as well. You have some real estate in there which has similar return characteristics to small-cap value, where it can deliver a steady stream of returns, if we have some prosperity. It should be somewhat uncorrelated with those big large cap bubbles that we get from time to time. The thinking behind it is I can’t predict what’s going to happen next. So, I’m going to own a mix of these different asset classes and some cheap ETFs and then hopefully I can get a smoother rate of return over the long run.
Jake: Two questions. One, how do you express the gold holding and the real estate?
VSG: Gold, I use SGOL and another one, I use is GLDM. So, the two ETFs. So, obviously, if you’re a true gold bug, you don’t want to own gold ETFs. I’m not so much concerned about the financial system collapsing in some kind of horrible scenario. I think in that, physical gold won’t really help you much. Anyway, you need guns and you need canned goods. They’re probably what you need in that scenario. So, I do it through those ETFs. And then real estate is through the large index funds like REIT. That’s the iShares product that gives you some global exposure to real estate. And then I use VNQ and VNQI, which are the Vanguard products.
Jake: Question number two. When are you launching The Weird ETF?[laughter]
VSG: I don’t know. If anyone’s interested, I’m all ears about it. It would be nice to have one little ticker that I could just click on and buy it, rather than have to do the rebalancing and constantly try to add to what’s light all the time.
Tobias: What’s the ticker?
VSG: I don’t know. What would be a good ticker? WRD? [laughs]
Tobias: We’ve got to keep on workshopping that one.
Jake: Needs a little work.
Tobias: But it’s a good start.
VSG: Yeah, it’s basically like a risk parity style portfolio. If you take it back to 1970, it gives you a pretty similar return to owning 100% US stocks, but with more shallow drawdowns and less volatility. It’s definitely underperformed over the last 10 years while US markets have gone nuts. But I think if you hold it over a 20-, 30-year period, it should do better. Even if it doesn’t, it helps me sleep better at night knowing that I have some protections in there if we have a 2008 kind of scenario.
Jake: What you need to do then is lever it up to 150-
Tobias: Now you are [unintelligible [00:17:14]
Jake: -and now you’re really cooking.
VSG: Well, that’s how you get into trouble. A lot of these risk parity style portfolios got into trouble last year, because it was this unusual year where bonds and stocks went down at the same time. [crosstalk]
Jake: Correlations broke down.
VSG: Yeah. That’s going to happen every once in a while. It’s going to happen every time that the Fed has one of these hard money kinds of phases. They don’t last particularly long, but if you’re levered it defeats the purpose of what you’re trying to do, which is get just a smooth and steady return and be able to plan things out better.
Tobias: So, when you’re picking stocks, are you picking small-caps or is that taken care of by the ETF?
Jake: Like, for the writeups?
VSG: Yeah. So, I look at that is taken care of by my small-cap value ETF. What I’m looking for are really good businesses. So, I’m basically going through companies one by one and then writing them up on my Substack. And the companies I’m looking at tend to be larger and mid-caps, mainly, because I think there’s better businesses in that segment. When I buy an individual stock, I want the kind of thing I can hold for like 5 to 10 years, and I’m finding more of those businesses in the large and mid-cap space. I’m not opposed to owning a small-cap. That’s really high quality. It seems to be that the better businesses are in the mid and large.
Tobias: How are you making the determination? Like, how do you know what to look at?
VSG: That’s tough. So, I do have a long list of companies that I know anecdotally are pretty good. For instance, Visa, Mastercard, Google. Everyone knows these are pretty good businesses. I have a pretty large list of companies that I want to look at that are like that. Some sources that I’ve looked at before to look for some ideas would be like the Dividend Aristocrats. That’s one idea. I’ve looked at some of the quality ETFs to try to find them in there, but I don’t want to fall into the trap of buying these things when they’re egregiously expensive. I want to buy them when they’re a little beaten up and there’s a margin of safety there. So, I’m basically building up this watch list of companies and then buying them when they get a little bit cheap. If I can’t find any, then I’ll hold this asset allocation instead.
How To Think About Valuation
Tobias: How do you think about the valuation? How do you come up with your valuation?
VSG: I think you want to look at it two ways. I look at it in absolute and relative terms. So, absolute, I’m looking for a decent free cash flow yield that can at least exceed, say, like a 10-year Treasury. So, roughly speaking, like, a 5% yield or higher. I’d say 5% would be I would want at least a 5% free cash flow yield. And then relative, I like to look at 20-year trending in different valuation metrics and try to grab it at a trough there. So, I think if you look at a lot of stocks, you look at 20 or trending and price to book, for instance, you can usually spot times when it’s near a trough or you can also see if it’s egregiously overvalued. Because at the end of the day, these multiples are just an opinion. So, I think that the best input into figuring out what multiple it’s going to trade at in the future is to look at a lot of the multiples that it’s traded at in the past.
Jake: Yeah, speaking of that, I don’t think I’ve ever talked about this before, but on GuruFocus and shoutout to Charlie, by the way. They have this little analysis tab where it takes– Does different metrics, but price to book, for instance. It will do the most expensive price to book that it’s ever traded at. Then it’ll multiply it by book value. That’s, like, the top line. Then it’ll do the cheapest it’s ever traded at and then that’ll be like the bottom line. Then it will just run price to book in between those two. And so, you can see over time, where has it been in its relative history and relative min and max of price to book, it makes it really quick and easy to see like, “Shit, this is like the cheapest this has ever been.” You can see it within two seconds of looking at it.
VSG: Yeah, that’s the analysis that I do a lot. I didn’t know GuruFocus had that, but that’s really cool. But the tool I typically use is QuickFS, so you can download that in Excel, and then I can take a look at that trending. But yeah, I agree. Then I try to do the math and I try to say like, “If this is the minimum price to book 10 years from now, what’s my return going to be, if I assume these growth rates and I assume that I’ll be getting this kind of shareholder yield?” It definitely gives you some perspective and you can get a better idea of whether or not you’re capturing it at a margin of safety. I’m hoping if I own enough of those situations that it should deliver a good return at a portfolio level.
How Homebuilder NVR, Inc. Mitigates Risk
Tobias: Do you have anything interesting that’s good and undervalued?
VSG: This week, I’m writing– [crosstalk]
Tobias: For Substack subscribers only?
VSG: No. This week, I’m researching NVR, which is a pretty interesting home builder company. So, you would think home builders are terrible businesses. You think it just boom and bust and they wouldn’t really earn a good return over the long run. But NVR is a bit different. It’s a pretty good company. They focus mostly on the East Coast with a focus on like the D.C. areas is a big area that they’re at. Right now on an absolute basis, it looks cheap. It’s got like an 11 PE and over 10% free cash yield. So, that stuff is good. The way that the company is structured is pretty interesting. So, basically, they almost went bust in the–
Well, they did go bust. In the early 1990s, they went bankrupt. From that, they learned some lessons, and the lesson was that they didn’t want to own large quantities of undeveloped land during real estate bust. So, they switched to a method where they would instead buy lot purchase agreements. They’re like options to buy land. So, they don’t go through the same level of boom and bust as a lot of the other home builders. And with that they earn pretty high returns on capital. With that it’s been like a mega compounder. It’s delivered pretty consistent returns over 20% if you hold it for like 10, 15-year periods of time.
Now, the downside to it is obviously, what’s going to happen with the real estate market. So, you look at that long-term trending and price to book, right now they’re at 5X. They usually average around 4X. So, it’s possible that those cheap PE metrics might be a value trap, and a lot of that depends on what exactly happens with the housing market. It’s pretty volatile stock. It’s had like 10%, 20% drawdown, it was down over 60% back during the GFC. So, right now, it’s only off by about 5%. So, I wouldn’t say it’s particularly beaten up, but it’s a pretty good company. It’s the kind of company where even if you bought it at the peak, for instance, in 2005, you would have still earned a higher return than the S&P 500. So, you really wouldn’t think that you buy a home builder and hold it through the global financial crisis that you would make out okay, but NVR is a special company.
Yeah, that’s what I’m looking at this week. It’s pretty interesting company. I’ll release that rate up on Saturday. I’m having this debate with myself all week like, “Is this a value trap? Is this actually a solid opportunity?” That’s the kind of things I want to own. Things where you can be a bit wrong on the timing and you can still make out okay, if you hold it over the long run.
Something Has To Give In The Housing Market
Tobias: Let’s talk about the real estate market a little bit.
Tobias: Let’s talk about resi. What do you think?
VSG: Yeah, I don’t know. On one hand, you have these incredible demographic pressures on the real estate. Benefits of the real estate market, where millennials are entering middle age. They’re a pretty big generation. They’re bigger than Gen X. You’ve had this underbuilding that’s been happening for the last 10 years. So, that’s a good thing that’s happening with real estate. And then obviously, the bad thing is mortgage rates are sky high and prices are sky high. So, yeah, I’m not really sure how it’s going to shake out. It all depends on whether or not we have a recession.
Tobias: Yeah, very hard to tease out what’s happening there. I agree. The underbuilding, that was one of the reasons I like the home builders. I don’t know when we were talking about that a year or two ago, because there’s clearly, like, they had underbuilt from the GFC onwards and whatever huge number was. I can’t remember. It was millions of houses short. But then at the same time, there is that potential for an impending recession that we may already be in. Who knows?
VSG: Yeah, and it’s yet to be seen. I would say owning a home builder, you want to own it when it’s a little bit beaten up. They don’t seem too beaten up right now, even though the– [crosstalk]
Tobias: The strength of the home builders has been amazing.
Jake: Yeah. [laughs]
VSG: Yeah, it’s a sight to behold. It really defies all logic [laughs] how great they are, but so maybe there is something to that demographic argument about housing. But at the same time, it does seem also like housing is way out of whack with rents. That’s something to take into consideration. Collin Roach, he’s been posting some interesting stuff about the real estate market that makes me a little bit leery about buying a home builder.
Tobias: What does he say?
VSG: He’s basically been looking at it through that analysis, like rents versus average mortgage payments, and then saying, “Well, either rents need to increase dramatically or housing prices need to come down pretty dramatically.” [crosstalk]
Tobias: Rents tend to be more constrained by income, whereas housing tends to be more of a speculative asset.
VSG: Yeah. So, if I had to make a bet, I would say housing is going to come down.
Jake: Rents are too damn high.
Tobias: The rent are always too damn high.
VSG: The man was ahead of his time. [laughs]
Jake: That guy had that nailed.
Tobias: It’s always true.
Jake: He’s the greatest macroeconomist I’ve ever come across.
Tobias: Do you think the rent’s [unintelligible 00:27:32] much since he said that? The rent’s probably doubled since he said that?
Jake: Oh, yeah.
VSG: Pretty significantly. I was looking at the apartment I was renting back then recently, las and I think it’s about double what I was renting back in [crosstalk]
Jake: I don’t think median income is doubled in that same time either.
VSG: No, no way. Yeah, I would imagine real estate prices are probably going to come down would be my guess. Hey, when they come down, it’s a great time to buy a home builder like NVR. [laughs]
Tobias: How about energy? Any energy make it into your list or is energy too volatile?
VSG: No, I’ve looked at some good– There are obviously energy companies that are way too volatile and are way too difficult to own. But I’ve looked at some of them. I think the best one is Valero. I wrote that up a few weeks ago. They just have like a distribution network that I don’t think can be easily duplicated. They have a lot of the pipelines where a lot of the energy companies will have that in a separate like MLP, but they have all of it under one roof. The distribution network that they have throughout the United States, I think, is second to none. That’s an excellent energy company that I would want to own preferably when energy is a little bit beaten up. I don’t really think it’s there right now. I think it’s had a pretty extraordinary time. [crosstalk]
Tobias: But if we get a recession, it’ll get nicely beaten up.
VSG: Yeah. So, that would be something I’d want to own if we have a nasty recession and energy gets destroyed, like it did in the GFC.
Tobias: Small caps are getting smoked at the moment or have been getting smoked. When I say at the moment, I mean the last decade or so.
Jake: Yeah, because– [crosstalk]
Tobias: Particularly recently.
Jake: Your whole investing career. [laughs]
Tobias: Only my professional career. I did work for a little while before I turned pro.
We Could Still Have a Good Decade For Small-Cap Value
VSG: Small-cap value had a pretty good run in 2021. It did beat the market last year. I think small-cap value as a category was down about 10%. It’s pretty good in a year when the market’s down 18%. Has a long way to go to catch up.
Tobias: Don’t pound that up for me, VSG. [crosstalk]
VSG: [laughs] I don’t know, I think the jury is still out. I think we could still have a pretty good decade for small-cap value in comparison to large caps. But the trick with small-caps is you really do need a robust economy for that to work, because a lot of them are pretty cyclical, a lot of them aren’t these kinds of situations that you can just buy and hold and kick back on. They are more cyclical situations. So, yeah, you definitely need the economy to consistently perform. That’s what happened in the early 2000. You had a situation where the economy was pretty much okay, and you had this trouble in the large cap segment of the market, and that was the Goldilocks moment– [crosstalk]
VSG: Yeah, small-cap value. So, if we could have a situation where large caps compress and the economy doesn’t enter a global financial crisis, yeah, small-cap value could do quite well. That’s definitely one of the things that could happen.
Tobias: It’s really, like, the porridge has to be just at the exact same temperature to get those small-caps working.
VSG: [laughs] Yeah, it is a moment when people have given up on small-cap value, they’ve given up on international. So, usually, once everyone has completely thrown in the towel, that’s when they start to do pretty well. So, maybe that will happen again. Who knows?
Tobias: That’s when they have the flush to test your faith, and then they rally after that.
VSG: Yeah. The market’s diabolical like that. [laughs]
Tobias: Indeed. I know you watch the show, VSG. Jake has veggies that he does every week. We didn’t get to the veggies last week, because Cam answered that first question and then I squeezed a few questions at the end. [laughs]
VSG: Yeah, it was an awesome episode.
Tobias and Jake: It was great.
VSG: It was one and a half–
Jake: Yeah. So, you’re saying it’s time for some veggies?
Tobias: Yes. Should we do some?
Tobias: Give the people what they want.
VSG: Let’s go.
The Gambler Who Cracked the Horse-Racing Code
Jake: All right. So, this week is entitled The Gambler Who Cracked the Horse-Racing Code. I always love these kind of gambling stories. They’re always infinitely fascinating. This one comes from a 2018 Business Week feature that was sent to me by 1 of The 10, this guy named Otto. So, shoutout to Otto. The story is about this guy named Bill Benter. Benter, B-E-N-T-E-R. Very publicity shy, unassuming. He looks like he’s a university professor, but 1979, he’s 22 years old, he drops out of college to go to Vegas and play cards for a living. He’d read Thorp’s Beat the Dealer and he was working at 7-11 for $3 an hour and scraping all of his money that he could into a grubstake to try to launch a gambling career.
After a few years, he ended up teaming up with this group of card counters who would share their profits together, which is one way of getting your in up high enough, where you take out some of the idiosyncratic nature of luck. Before long, he was making $80,000 a year counting cards playing. But in Vegas, of course, eventually he’s IDed with the casinos, and he gets put into the Griffin book, which is this– it’s a blacklist that’s put together by this detective agency, who then sells it on to the casinos of like, “Here’s who all the cheaters are,” basically. So, he had to find– [crosstalk]
Tobias: Is that cheating?
Jake: Well, it’s not cheating.
Tobias: You’re not allowed to bring skills to the game? You are supposed to lose?
Jake: Yeah, you’re not allowed to win. That’s just how the house works. So, he had to find a new game. And of course, he wanted to make money, but what he really wanted to do was conquer horse racing, because everyone said that it couldn’t be done at that point. And so, he moves to Hong Kong, which turns out horse racing is huge in Hong Kong. The population at that time was only five or six million in the 1990s, but they bet more on horses than the entire US. It was like $10 billion a year that they were gambling on horse racing. As like other racing systems, it’s parimutuel and it’s run by the government, and the house takes a 17% rake off of the top.
So, you have to basically get over 17% to get over the odds that are against you. It’s amazing that it provides as much as one-tenth of the tax revenue for Hong Kong is this horse racing scheme. Benter goes over there and he teaches himself advanced statistics and he learns how to write software. He basically was going to build a computer model to help him crack the code for horse racing. He hand entered all of these huge databases with results of thousands of races and just cramming as many variables as he could into this model and correlating it to the winners, and including he traveled to this dusty library basement in the UK that had Hong Kong weather data, and he’s hand entering it, and it turned out that proved to be completely unpredictive, had no predictive value. [laughs]
Jake: There’s this nice explanation of the Kelly formula actually that Benter was using at the time in this article. And it says, “Kelly imagined a scenario in which a horse-racing gambler has an edge: a “private wire” of fairly reliable tips. How should he bet? Wager too little, and the advantage is squandered. Too much, and ruin beckons.” Remember, the tips are good, but they’re not perfect. So, Kelly’s solution was to wager an amount in line with the gambler’s confidence in the tips. All right. So, in his first year of horse betting in operations, he gets his computer up and running. It’s 1986, and he lost $120,000 of the $150,000 steak that he built.
VSG: Oh, wow, man.
Jake: Comes back to the US and spends two years in Atlantic City managing a team of card counters and rebuilding his stake and improving his horse rating model the whole time. So, he basically came home with his tail between his legs and had to start over. Then, he comes back to Hong Kong, and then in the first year, he made $600,000. A big breakthrough came when he hit on the idea of incorporating a dataset hiding in plain sight that no one was using, and that was the publicly available betting odds. So, he was building his own set of odds from scratch and that had been somewhat profitable. But then, he found that using the public odds as a starting point and then refining them with his proprietary algorithm was dramatically more profitable. So, he considered this move his single most important innovation. In 1991 season, he won $3 million.
Just a break, real quick. This is, to me, very similar to Mauboussin’s book, Expectations Investing, where you can back into basically what Mr. Market is implying and expecting for a company based on the price. And then, you get to decide, do you agree with those odds or not? Do you agree with the assumptions that are used?
VSG: Yeah. [crosstalk] Andy Beyer. The handicapper, Andy Beyer, he used to figure out the speed figures and did something pretty similar with the odds and was able to figure out the true odds versus what was posted.
Jake: Right. That’s the name of the game, I think. So, Benter then, he took on outside investors and he effectively set up a hedge fund that bet on horse racing. And so, 1997, there was a lot of fear that transition from Hong Kong, from British rule over to Chinese rule, would end the party for everybody. Meanwhile, Benter is having just an absolutely epic season. He’s up more than $50 million. And thankfully for him, there wasn’t much change as far as the horse racing front goes from the government, but the market dramatically changed. The betting market started wising up, they started using computers, and the competition increased a lot. So, Benter says that, “There is a golden age for a particular market when there aren’t many computer players. The guy with the best system can have a huge advantage.”
So, he ends up closing down shop at that point, because his edge is gone. He moves back to the US, and he actually starts focusing on US horse racing, which was actually relatively immature compared to the Hong Kong market. So, he brings his bag of tricks over to the US and starts cleaning up there. He retired to Pittsburgh, where now he engages in philanthropy. Basically, he made more than $1 billion betting over his entire career as a horse racer, which, I think a lot of people would said it couldn’t be done. So, there’s a fun little horse racing segment with a tiny, tiny bit of tangential relation to the investment world.
Tobias: He got over that 17% vig to make a billion.
Jake: That is amazing. But that shows you like, boy, are you currently competing in a market where you have the edge of information or analysis or behavior, because those are the three edges that you can have. I think he probably had perhaps all three of those when he was really cleaning up compared to the competition. So, just important to think about whatever game that you’re entering and trying to win, like, where is your edge?
VSG: Yeah. There are definitely a lot of parallels between horse racing and the stock market. You think about the favorites in a typical race, it would be a very bad idea to just bet the favorite in every race. You would win more consistently, but over time, you would bleed away money. You definitely need to find the situations where the posted odds are wrong. Yeah, I guess, just buying the favorites over and over again is probably the equivalent of buying overvalued stocks. Over the long run, that really won’t make a lot of money.
Tobias: The odds change as the betting changes. So, the more betting that goes on a horse, the shorter the odds become.
Tobias: So, you’re fading the crowd all the time. I don’t know how the professional gamblers do it, but I don’t think they’re betting on the nose. I think they’re betting like place or show across a handful of horses in a race where they feel like there’s some horses skewed the odds a long way and then it leaves a few others undervalued.
VSG: Yeah, or the exotics, the trifectas, and the superfectas, and all that stuff. Whenever you do look at those horse races, you’ll always see the favorite always gets better odds than what’s posted in the actual book, because everybody in the crowd is going to go for them. You’ll have a horse that’s rated like, two to one, and that’s the favorite, and that’ll typically go for something way less attractive than that. So, if you can figure it out, there’s definitely money fading that popular opinion.
Tobias: So, the US equity market is the Hong Kong racing market. Where’s the US racing market?
Jake: Hong Kong? I don’t know. Well, you actually can– [crosstalk]
Jake: Well, there’s a couple of ways to look at that. You could actually look at retail participation in different markets, and to back into what’s the puntiest marketplace.
Tobias: What does that indicate? I like that idea, but which way does that indicate? Do you want to betting against a whole lot of no-nothing investors or do you want to be–? [crosstalk]
VSG: No nothing.
Jake: Yeah, I think you do over a longer period of time. Of course, there’s going to be– [crosstalk]
Tobias: [crosstalk] indicate froth.
Jake: Not necessarily. I think it just indicates lack of professionalization yet.
Tobias: Because if you think about the last few years, the last few years in the market have been characterized by a lot of retail participation. It was basically ebbing away until the last few months here.
VSG: Yeah. There’s definitely a lot of parallels there. I know that with horse racing, there used to be a lot more easy money to be made at the US. There would be people who would bet based on the color of the horse or the number of the horse– [crosstalk]
Tobias: That’s perfectly [unintelligible [00:41:56]
VSG: And those people are all gone and now you’re dealing with a group of hardcore handicappers, and it’s way harder to make money betting on horse races than it used to be. I think that’s a good parallel to the stock market itself. The more people that opt out and go passive, the harder a game it is to win.
Jake: Yeah, I think so. There’s another thing that I was recently introduced to, and it’s called SPIVA results, like S-P-I-V-A.
Jake: Have you seen this before?
VSG: Yeah, absolutely. It’s pretty crazy.
Jake: I’ve never looked at this before, but what it does, it’s part of, I guess, S&P 500 or Standard and Poor’s datasets, but you can look at different markets and look then at, like, the percentage of funds that underperform the benchmark, and look at long time horizons on it. I think they go up to 10 to 15 years for most of the marketplaces.
VSG: They do 20 years, I think, and then they’ll break it down by asset class.
Jake: Yeah. So, you can look at an asset class, let’s say, small-cap value in the US, for instance. 91% basically have underperformed their benchmark.
Tobias: Small-cap value? Sorry.
Jake: Yeah, right.
VSG: Yeah, it’s true across every single category that it gets the sobering numbers. [laughs]
Tobias: Russell 2000?
Jake: Their benchmark- [crosstalk]
Tobias: Small-cap value would be Russell 2000– [crosstalk]
Jake: -is to S&P small-cap 600.
Tobias: The 600. Just remind me what the 600 is.
Jake: I don’t know what’s made up in–
VSG: The total would be…
their equivalent of the total would be the S&P 1500, and then that’s broken down like S&P 600 is small, 400 is mid-caps, and then 500 is large caps.
Tobias: Yeah, I guess that’s the largest 600 out of the Russell 2000.
VSG: Yeah, it’s the 1500 selected by the S&P committee. So, it’s usually pretty close to the Russell indexes. But yeah, there is a filtering process that goes through there where they’re picking things out that go of the total Russell 3000 narrowing it down to 1500, and then breaking them up into buckets.
Tobias: Did you see that–? I talked about a little bit last week, but that holding, just not rebalancing has been a better strategy than rebalancing than holding the S&P 500. If you just take a snapshot at any given point in time, I think, and you just hold it with that rebalancing and you let it go wild, it seems to outperform the index itself by a small amount, not by a large amount.
VSG: Yeah, it’s a pretty wild effect. Then, you see that in a lot of those coffee can portfolios. You’ve talked about that before, how if you let a portfolio run for 5 or 10 years, eventually you look like this Kelly better, you’ve got 50% in one stock. Yeah, it’s funny how that happens, how one stock can come to just dominate the whole thing.
Jake: And you’re a genius.
Jake: How did you have the conviction to hold that winner? You’re so smart.
Tobias: You’re still in it. It’s up 800 times and you’re still holding.
Jake: God, what a machine.
Warren Buffett’s Never-Sell Strategy
Tobias: I think that’s part of Buffett’s success has been– Aside from the fact that he’s done pretty well picking them, he just doesn’t sell for the most part. Just lets it roll.
VSG: Yeah. Like Coke, basically, he gets the entire market capitalization. He paid back in 1987. He gets that paid in dividends. Now, Apple, he’s doing the same thing with that. He’s just letting that run.
Tobias: On a recommendation from my good friend, Jake here, I went and listened to the Berkshire archives of all of the meetings. I haven’t listened to anywhere near the whole thing. I was just searching a few things as I went through it, but it keeps on pulling up the same parts. It’s amazing how very early on– Buffett, I think he put $1.3 billion into Coke very early on. When he put $1.3 billion into Coke, it was 40% of Berkshire. Two years later, the $1.3 billion was worth $3.4 billion, which was the entire market capitalization of Berkshire when he put it on.
VSG: Wow. That’s incredible.
Jake: He’s pretty good.
Tobias: He is good at this game. And then, he didn’t sell. Now, they’re all like, he puts them on at one and they’re $22 billion, $25 billion positions that are sending back $700 to a billion dollars in dividends. It’s amazing. You guys ever heard of that guy, Warren Buffett?
VSG: I’ve heard of him. And then– [crosstalk]
Tobias: He’s an insurance investor.
Tobias: He runs an insurance.
VSG: Even did that brilliant move in 1998 or so when he bought General Re to basically dilute the holding in Coke without selling it and without realizing the taxes from it, it was a pretty masterful move right there. [laughs] Realizing it was overvalued, figured out a way to reduce it without actually incurring any taxes.
Jake: Yeah. Take an equity portfolio that was overvalued and a price to book at three times for Berkshire at that point. So, not only is the underlying probably rich, but the container that it lives in is too expensive. Trade that in for basically a big bond portfolio, water the whole thing down, and then reset, and come out the other end looking like a genius.
Tobias: Then, the hilarious thing is, you see every letter after that, he talks about they didn’t know about the derivative of General Re. So, he just criticizes– He says he made a mistake like every year for the next two or three or five years after that. I think it’s funny. It’s amazing– [crosstalk]
Jake: Well, they did clean them all up though before they actually were– He said it was hard to unload it, but that was even in an orderly market selling off these derivatives, getting out of the contracts was difficult. But I don’t think they lost too too much money on that.
Tobias: When was that big derivative meltdown? Was that pre the GFC? Was it [crosstalk] GFC? Yeah, he knew it was a powder cake and he was winding it up before.
VSG: Yeah, he was talking about how derivatives are weapons of mass financial destruction back in 2003 or something. He was way ahead of the curve on that stuff.
Jake: Well, that’s what’s so amazing about going through the archives like that and listening to them in real time, or listening to what they’re worried about in real time and knowing what’s coming up next, and then– Just the triangulation of that I find to be so fascinating and so elucidating as to how these guys think. I know I rave about this all the time, but it really is amazing thing.
Tobias: It’s a good exercise.
Jake: Yeah, it’s great.
Tobias: It’s amazing to hear how many times they get asked questions which basically like, explain the valuation of this thing or explain the prospects of this thing, and he says, “I’m not going to tell you what I think, but here’s one way you could think about it.”
VSG: Yeah, that’s true.
Tobias: He’s just got playing on a different level to everybody else.
VSG: They are really fun. The 1990s Berkshire Hathaway meetings, I think, are the best. I listen to those a lot on walks. You definitely learn a lot. They’re awesome now, but back then, they were just like intellectual Rambos. [laughs] The insights that they’ll drop in 10 minutes of conversation will blow your mind.
Jake: They’re really funny too. They’re hilarious to listen to. It’s like a little standup act also on top of the best business school that you could imagine.
VSG: Yeah, that is true. It does make me laugh often.
Tobias: John DeGrummond says, “AIG was 2008.” Thanks for that, John. Yeah, that’s right. That was the ground zero for that explosion. Everybody, I’m way too bearish, but what’s ground zero for this one? SVB?
VSG: I would say the tech sector itself.
Tobias: Tech [crosstalk] 2.0.
VSG: All of the easy money that’s flowed into that sector and then all of the wild– I don’t know if it’s all really flushed out. I would imagine if we’re at the bottom that you would have flushed out a lot of the obvious scams and things, but I don’t really think that they’re fully gone. I still think there’s signs of some very bubbly activity.
Tobias: There’s a new peppy coin out there. There’s new coins.
VSG: Yeah, there’s new coins all the time. There’s new scammers emerging. I think D.C. is probably still throwing money around at whatever project they can find. I imagine it’s tightened a little bit, but probably not as far as it needs to go.
Jake: I saw some stats on this recently, and the seed round Series A. B, C, prices were down a little bit, not a lot on these rounds this year, but volumes are down quite a bit.
VSG: Yeah, I would imagine that they’re down a little bit, but it just doesn’t feel– [crosstalk]
Jake: It’s like housing. No volumes, but prices haven’t really moved.
VSG: Yeah, it just doesn’t feel like you’ve had the blowout that you would really need in the major bear market. Of course, I’ve been saying that for 10 years now. [laughs] Every time I think it can’t go any down any longer, it keeps going. So, who knows? [laughs]
Tobias: I find it amazing to have a look at the chart, those three bears, just how quickly– If we started 2009 the same time we started 2022, if you run them together, we’re four weeks from the bottom in 2009. That felt like a long drawdown. Was it 18 months? More than 18 months? Was it 21 months, something like that?
VSG: Summer 2007 and then it ended March 2009. So, it was a pretty long rolling slide down.
Tobias: 20 months.
VSG: Then, you’ve got the early 2000s one started, spring of 2000 and the spring of 2003. So, yeah, they can go on a long time. Then there are many, many false rallies the entire time. And then, I imagine 1973 to 1974 was probably a similar experience. Just when you thought it was over, it got worse. Who knows? We might be in the middle of one of those right now.
Tobias: Yeah, 1973, 1974 had that second leg down, which was very nasty.
VSG: Yeah. Then, that was right after a drawdown in 1970, when you had– A lot of people thought that was the big one. 1973, 1974 came on [laughs] and made it look like it was nothing.
Jake: Yeah. I wonder sometimes the parallels there, because in between those two. That was the Nifty 50, and that was like the– [crosstalk]
Tobias: The Nifty 50 was in between or was it preceded it?
Jake: Well, it was both.
Siegel vs Bloomstran On The Nifty 50
Jake: I can’t help, but wonder sometimes about some of these big companies now that seem “so inevitable.” If people aren’t hiding out a little bit in those right now with the same kind of mentality that people might have been back then– Those were probably frothier at one point, but just the idea that, “God, I can’t go wrong owning this big tech company, because it’s such a dominant behemoth.” That was the same story and the same rationale that was used for the Nifty 50 as well.
VSG: Yeah. And there’s two sides of that. So, there’s the side where they were egregiously overvalued. You had this nasty drawdown. Then there’s the Jeremy Siegel study that says, “If you held it for 20 years, you match the S&P 500.” I don’t know. I think the truth is somewhere in between, I think what you want to do is find those companies when they’re beaten up after a drawdown to make sure you don’t pay 50 PEs for some company, that there’s no actual company where you’re going to try to– It’s worth any price in the world, you definitely have to keep your wits about you if you’re going to be invested in those things. But on the other hand, many of them are worth holding for long periods of time if you can catch them at an attractive price.
Tobias: Was there some question about that Siegel study? Was it entirely– [crosstalk]
Tobias: Yeah. What did Chris say?
VSG: Siegel said they outperformed the market, and then Bloomstran showed that they slightly underperformed the market. I think another issue with the study was that it ended in the late 1990s when things were already over the value– [crosstalk]
Tobias: Okay. Back to the peak. Peaked at [crosstalk] I guess.
VSG: That was Bloomstran’s point. Yeah, I think the truth is somewhere in the middle, where there are good companies that can hold for a long period of time, but you just don’t want to pay ridiculous prices for them.
Tobias: It’s another argument for never sell, anyway.
VSG: By the Nifty 50 in 1974, don’t buy them. [laughs] 1972.
Tobias: 1974. Yeah. At some point through there, you look like a genius when you buy them.
VSG: Yeah. That’s when Buffett was picking up a lot of them. I think he picked up some Nifty 50 stocks after they were pretty beaten up.
Tobias: Well, 1969, he wound up the partnership. Is that right, 1969?
Tobias: Then, he starts running Berkshire properly, 1971 or 1972, something like that?
VSG: Yeah. And then in 1974 is when he wrote that article. He said he was like an oversexed man in a harem, [laughs] because the market was throwing so many opportunities. I doubt he could get away with saying something like that today, but that’s what he said. [laughs] Yeah, he was saying they were Phil Fisher companies at Ben Graham prices. That’s what he was saying in 1974.
Jake: Come to daddy.
Tobias: Yeah. Wouldn’t that be nice?
Jake: Yeah. What’s that like?
Tobias: Yeah. My entire career, it’s been Shiller PE [crosstalk] to the–
Jake: Yeah. Ben Graham prices come with cyclical overhang and scariest shit prospects. [laughs]
Tobias: Shiller PE starting about 44 in 2000, currently about whatever it is now, 30 something, high 20s. I don’t know.
VSG: Yeah. And only ever got down to the median. So, I think in 2009, it got down to 15 or so, which isn’t that attractive by historical standards. There are probably a lot of people at the bottom in 2009, they said, “Oh, this isn’t the bottom. It needs to go down to the 1980 lows of five,” or whatever it was back then. Yeah, it’s definitely– [crosstalk] [laughs] Yeah, so, it’s a side leg– [crosstalk]
Jake: [crosstalk] leg didn’t show up.
VSG: Hard to say it. It seems like it’s just going to perpetually stay at those values. I actually talked to Laurence Hampton about this on the recent podcast. He said, his perspective is more that when you look at it at a sector level that market valuations have made a lot more sense over the last 20 years.
Tobias: Yeah, that’s right. Yeah.
VSG: Yeah, I thought that was a cool way to think about it.
Tobias: In the sense that there are some businesses that deserve higher multiples, and the tech have been better businesses and they’ve dominated.
VSG: He makes the same point about international. So, a lot of times, you’ll hear, “Well, international is cheaper on a Shiller PE basis.” He points out, “Well, it’s because of the sectors that they’re exposed to, these are perpetually undervalued sectors.” So, that’s one point of view on it.
Tobias: Colin Moore sent us £30.00 for Guinness in Berkshire. You have to come and collect that, Colin. We’ll hold onto it for you.
Jake: Yeah, that’s just a deposit on the first round. [laughs]
The Shiller PE Never Gets Cheap
Tobias: “The Shiller PE is too damn high!!” That’s right. It’s going to be my T-shirt.
VSG: [laughs] I’d buy that. That sounds like a great T-shirt. [laughs]
Jake: Oh, that’s a T-shirt that’s lost a lot of money.
Tobias: It’s evergreen.[laughter]
Tobias: That’s right. Evergreen.
Jake: Oh, tell me you’re poor without telling me you’re poor.[laughter]
Tobias: The amazing thing is that Shiller PE has spent half of its time underneath that average, which has been creeping up over the years. It used to be 16. That’s almost– [crosstalk]
Jake: The math checks out.[laughter]
Tobias: It’s hard to believe. Maybe in 10 years’ time, we’ll be laughing about the fact that it used to be overvalued all the time. Be a great decade just to be value in cheap.
Jake: Put that on in your quotes for 10 years from now. Come back and revisit this one. We’re complaining about this. Too expensive.
VSG: Yeah. Then, if you use it as a market timing tool, when were you long? You were long for a hot minute in 2009. [laughs] But I’m going to wait for it to get Shiller PE to get cheap. It never seems to get cheap.
Tobias: Yeah, you got to never sell.
Tobias: Wave them in and then never let them go.
VSG: He actually made another point, which he said that the forward PE seem to have been more predictive over the last 20 years.
Tobias: Yeah, that’s unusual. It’s because it’s been bullish. It’s been aggressively bullish. They’re always ahead.
VSG: Yeah, I know that when you look at individual stocks, forward PE tends to underperform. You guys went through that in quantitative value.
Tobias: It’s time, VSG. Let everybody know where they can get in contact with you.
VSG: Sure. The best way is securityanalysis.org. That’s my Substack, where I’m posting these podcast episodes, and the company write ups, and tracking my portfolio. Full transparency. And on Twitter at @valuestockgeek.
Berkshire Hathaway Meet-Up
Tobias: Yeah, that’s a great account. JT and I are going to be in Omaha this weekend. We’ll tweet out where we’re going to be. After the event, we’ll be across the road of the Hilton upstairs probably on the second level. We were there last year, and it was pretty quiet. You can stand around.
Jake: It worked out well.
Tobias: So, we’ll probably be around there somewhere. It would be great to see everybody. We saw last year and anybody new is welcome to. It’s just a group of about– How many did we have last year? We had like 30?
Jake: 10 or whatever.
Jake: I think it was– [crosstalk]
Tobias: I’ll make a liar out of me.
Jake: I think it was [crosstalk]. I don’t know.
Tobias: It was a big crew. It was good.
Jake: Yeah, it was good.
Tobias: But that was great. Value Stock Geek, thanks so much.
Jake: Safe travels, everybody.
Tobias: We’ll hope to have you back on in the future.
VSG: Cheers. Thanks for having me on.
For all the latest news and podcasts, join our free newsletter here.
Don’t forget to check out our FREE Large Cap 1000 – Stock Screener, here at The Acquirer’s Multiple: